LunaticTrader

Investing with the Moon

Outlook October 25

Posted by Danny on October 25, 2010

Except for one big down day last Tuesday, again we didn’t get any real downside action in the current Red Period.
This means the path of least resistance is still up.
Every little dip in the market is bought almost immediately.
Where will it end?

Here is our longer term chart of the S&P 500 Index (click for larger image):

Resistance levels at 1130 and 1165 were taken out very easily in the recent weeks. Now the only remaining hurdle for the S&P is the 1220 level, the recent April highs. If that level is broken decisively to the upside, then things open up towards 1300 and even 1400, where we would run into the upper boundary of a long term up trend channel.

We have only a few days of Red Period left. Use down days to position for the next Green Period, when we are likely to go for a first test of the 1220 level on the S&P.
After that I think the market will make a drop to 1130 by the end of November.

Good Luck, Danny

2 Responses to “Outlook October 25”

  1. Chris Au said

    Hi Danny,

    Many commentators said that the current market is bought by US Tax payers. One guy, Robin Griffiths of Cazenove, said that the Sept rally was the work of Uncle Sam. Link for your info
    http://www.businessinsider.com/cazenovths-robin-griffiths-bearish-2010-10
    Another financial astrologer, Christopher Kevill, wrote on Sunday, 24 Oct, 2010, in his website, as, quote
    This week will see an unusual blending of positive and negative forces as there will be two Venus conjunctions along with a strengthening of Ketu (South Node). Mercury conjoins retrograde Venus on Monday and when these two benefic planets combine there is usually a lift in the mood that accompanies higher prices. At the same time, however, this conjunction will occur in fairly close aspect to Ketu. Ketu can be a disruptive influence which undermines the status quo and generates surprising outcomes. This could either act as a mirror that flips the expected outcome from positive to negative or it may act as a magnifier that actually intensifies positive outcomes. A more clearly problematic set up occurs midweek on the Sun-Ketu aspect as confidence may ebb as government and leadership is called into question. On Thursday, there is a second Venus conjunction, this time with the Sun. This is also usually a favourable alignment of planets that boosts happiness although again, the presence of weird Ketu confuses matters somewhat. If nothing else, the impact of these two Venus conjunctions will probably be exaggerated in either direction, so larger price moves are more likely.

    Unquote,

    I think Oct 29, 2010 could be an interesting day given that Oct 19, or 29 have quite a lot of market crash before.

    Above is just for info.

    Chris

    • Danny said

      Hi Chris,

      Thanks for your comments.

      There is never a shortage of commentators explaining *why* stocks have been going up or down.
      I generally avoid that kind of musings, because too easily it appears like finding excuses for why the market has been going against ones predictions or system.

      But if you ask me, I think the stock market is going up for the same reasons I cited back in April. There are no sellers.
      If you own stocks, then what are you going to do if you sell them? Keep the money in cash? Buy bonds? Real estate? Buy gold at $1300?

      Yesterday, 2 year US treasury notes sold out at a record low 0.4% interest rate.
      US investors must be very pessimistic about stocks and the economy if they are falling over each other to lock in a 0.4% yield for the next 2 years, while there are plenty of solid stocks paying 2% to 5% dividends, if not more.

      Danny

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